Puerto Rico: The Next Detroit?

0205-puertorico_full_600On Tuesday, credit ratings agency Standard & Poor’s downgraded Puerto Rico’s general-obligation bonds to BB+, a level that is considered junk status. Similar action by rating agencies Moody’s and Fitch appears virtually certain, as the island territory copes with a staggering $70 billion of debt, all of which needs to be repaid with interest. Unfortunately, Puerto Rico has been in what amounts to a continuous recession since 2006, and its economy is currently shrinking at a 6 percent pace. The official unemployment rate is 14.7 percent, and its debt-to-GDP ratio is 93 percent.

Furthermore, the island is experiencing the largest population outflow since the 1950s, when 500,000 residents left for better job prospects on the U.S. mainland. Between, 2010 and 2012 the commonwealth lost 54,000 residents, and another 36,000 from July 1, 2012, to July 1, 2013. The percentage of decline is more than seven times the decline of second-ranked West Virginia. 

Working-age Puerto Ricans who leave are being replaced largely by retirees highly unlikely to provide anything resembling the economic boost Puerto Rico so desperately needs. The vicious cycle has left the territory with a woeful workforce participation rate: only 41 percent of working age Puerto Ricans have a job or are looking for one.

Exacerbating this trend is the reality that only half of Puerto Ricans over age 25 have graduated from high school, and only twenty-five percent of those graduates earn a bachelor’s degree. The homicide rate is six times the nation average. Moreover, since the U.S. dollar is Puerto Rico’s currency, the option of devaluation as a means of making the island more attractive to outside investment remains off the table.

Puerto Rico’s troubles have unknown implications for the municipal bond market. According to the independent investment research firm Morningstar, the island territory’s debt is held by about 70 percent of U.S. municipal mutual funds. Those bonds have been attractive to many investors, as the yield on them have increased right along with the soaring debt that engendered that increase. Also their earnings remain free from state and federal taxes, and Puerto Rico’s constitution provides bondholders with strong guarantees that they would be paid off before pensioners and public workers if the government defaulted.

Nevertheless, high risk accompanies high interest rates, and as of now it appears that bondholders will be taking substantial losses. 

Puerto Rican Gov. Alejandro Javier Garcia Padilla has been determined to restore growth, and ran on a platform of creating 50,000 jobs. Toward that end, his government is in the process of offering manufacturers tax incentives and electricity tax credits, with the latter effort aimed at enticing firms that might otherwise be dissuaded by the island’s sky high rates, which are double those on the mainland. Government officials are also making an effort to boost tourism, and they are currently searching for someone to handle a $300 million port project to handle larger ships that will be en route to an expanded Panama Canal.

Despite these efforts, Padilla’s top priority remains bringing the debt under control. He has continued the government job cuts begun by his predecessor, and the combined cuts have culled one-in-ten government jobs. Many of the remaining workers have been switched from traditional pensions to 401(k)s. Padilla also enacted a monumental tax increase of $1.3 billion, comprised of corporate taxes, sales taxes and a gross receipts tax. 

The results have been fairly dramatic. The reforms have put the government on a path to possibly reduce 2013’s estimated $2.2 billion budget deficit this year, with the idea of eliminating budget deficits entirely by 2016.

Unfortunately, it may be too little too late. Government workers still comprise a quarter of the island’s workforce, compared to the U.S. average of 16 percent. Moreover, the government faces an additional $37 billion in unfunded pension obligations on top of the $70 billion in outstanding debt. This has led inexorably to the higher interest rates Puerto Rico must pay on its debt obligations, as the commonwealth continues to fund its day-to-day operations with borrowed money. “You cannot pay daily expenses with your credit card, and that’s what Puerto Rico has been doing for years,” said Deepak Lamba-Nieves, research director of the Center for a New Economy, a San Juan think tank. “We borrowed just to keep the lights on.”

That borrowing, a combination of bonds issued by the government and private corporations, including authorities for water and sewer, as well as highways and electric power, led to a tripling of Puerto Rico’s debt since 2000. Successive administrations on the island used the bond market to plug budget holes, a process that ramped into high gear during the economic slowdown. In 2006, deficits were exacerbated by the phasing out of a tax credit for manufacturers, and a housing bust that eliminated three of the island’s banks. That bust left many residents handling a personal debt crises similar to the one afflicting the government.

For many decades, a combination of low-cost labor and favorable tax laws had led many manufacturers to set up shop on the island, led by shoe factories and textile mills, and followed by drug manufacturers. The former group moved to more promising business locations, followed by the drug companies downsizing their output due a series of patent expirations. the one-two punch led to a precipitous decline in factory jobs from 160,000 to 75,000 since 1996. 

As a result, more and more Puerto Ricans have come to rely on government for their survival, with a third of the population receiving food stamps. Residents are also twice as likely to receive Social Security disability benefits than their mainland counterparts.

The Standard & Poor downgrade reflects all of this depressing reality. “Puerto Rico has limited liquidity without access to the debt market by either GDB  (Government Development Bank) or directly by the Commonwealth for sizable amounts of debt,” the agency said. “In our view, there is little margin for error over the next two years.” There was a smidgen of upbeat news as S&P recognized the government’s progress regarding spending cuts. “We view the reform as significant and could contribute to a sustainable path to fiscal stability,” the agency said, explaining that was the reason the commonwealth didn’t get a lower rating.

Yet the future remains murky. “The full implications of this downgrade are a real unknown,” said Matt Fabian, managing director of Municipal Market Advisors, a firm that tracks the municipal bond market. “How will bondholders react?” he wondered. 

It is more complicated than that. There is no chapter in the bankruptcy code that pertains to Puerto Rico, and absent that code it remains to be seen how a likely plethora of court cases revolving around sovereign immunity, and the contractual rights of bondholders, will be adjudicated. A bailout might help, but the U.S. government has already given Puerto Rico a back-door — and constitutionally dubious – bailout. The move, worth nearly $2 billion per year, was accomplished by allowing U.S. multinationals operating on the island to credit taxes paid to Puerto Rico on their federal tax bill. Yet it hasn’t done much to alter the island’s financial trajectory, and anything formal would likely be politically toxic for the same Obama administration that has allowed Detroit to endure the trials and tribulations of bankruptcy largely on its own.

The coming weeks will give a clearer indication of where Puerto Rico is ultimately headed. The government still needs to come to the bond market for financing on debt already accumulated. That would be a $3.7 trillion bond market already shaken by Detroit’s default. 

Yet the government will push on. “While we are disappointed with Standard & Poor’s decision, we remain committed to the implementation of our fiscal and economic development plans, said Treasury Secretary Melba Acosta Febo and GDB president David H. Chafey, in a written statement. “We believe the investment community will recognize the positive impact of the reforms that the Garcia Padilla Administration has enacted in due course.” Or, much like Detroit, the investment community might conclude additional financing no longer makes any sense. Only time will tell — but time is growing short. 

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  • The Facts

    Only Puerto Rico? The entire United States has been in a recession since 2006! Who is Mr. Ahlert kidding? Also, he thinks someone is going to collect $70 billion dollars from Puerto Ricans? What is this, standup comedy?

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    • Omar

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  • Omar

    Mr. Ahlert, good article. I would like to inform you and the Freedom Center that Puerto Rico’s economic problems are largely a consequence of its political status as a territory of the United States. Yet, we have Garcia Padilla (who I believed rigged the 2012 gubernatorial election in the island) and his Popular Democratic Party (PDP, which favors either the current territory status or seeks an impossible status proposal known as “enhanced Commonwealth”, which I will explain later) keep insisting that the government of Puerto Rico just focus on the economic issues, rather than the status issue. They ignore the fact that as a territory, Puerto Rico gets less federal funding than the 50 states. The current status has also impaired Puerto Rico’s full potential in the employment sector. For at least the past 4 decades, Puerto Rico’s unemployment rate has averaged around 15%, while the federal unemployment rate has averaged around 6.5%. In the last decade, the island territory has experienced a population decrease by over 4%, as a couple hundred thousand residents have moved to the mainland states over the past 10 years. Right now, an average of 4,500 people leave Puerto Rico for the states each month. It is obvious that the current territory status doesn’t work for Puerto Rico. And it is also clear that Puerto Rico’s current territory status doesn’t work for the United States as a whole, either. Throughout a large part of the 20th century and into the 21st century, our Communist enemies have been causing trouble in Puerto Rico by demanding the federal government to grant the island independence. The problems with that is that 1. residents of Puerto Rico are proud American citizens (residents of Puerto Rico have served in the U.S. Armed forces in greater proportional numbers than most of their fellow citizens in the states in every war since World War I) who want their island homeland to remain a part of the United States (if Puerto Rico secedes, future residents would be subjected to the same immigration laws in this country as all foreigners) and 2. 85-90% of the separatist movement in Puerto Rico is Communist and anti-American in nature. During much of the 20th century, particularly since the 1950s, the separatist movement has openly declared that America (and its allies) is the enemy and that the only solution for Puerto Rico is separation and Communism. It is no secret that the separatist movement in Puerto Rico is allied with and controlled by Communist Cuba (the only totalitarian dictatorship in the Western Hemisphere), its socialist client state in Venezuela and their allies (During the Cold War, the separatist movement in Puerto Rico was closely aligned with the Soviet Union, as the separatist movement shared the Soviets’ totalitarian ideology). So, independence is not the answer, as it would lead to a Communist totalitarian dictatorship in Puerto Rico controlled by Communist Cuba and its allies. Likewise, free association is not the answer either. The only difference between standalone independence and free association is that the latter offers a bilateral “pact” with the United States. As with any treaty, the relationship can be terminated by either party. the United States has free association pacts with three Pacific countries-the Marshall Islands, Micronesia and Palau. Residents of those countries, unlike residents of Puerto Rico, are not American citizens. In recent decades, the PDP has proposed an impossible status proposal for Puerto Rico known as “enhanced Commonwealth”. Under that proposal, island residents would remain American citizens and Puerto Rico would be provided with more federal funding than now. But the island’s government would also have the power to decide which federal laws apply in the island, as well as sign international treaties and get into international organizations that only sovereign countries can enter. The past four presidencies and multiple Congresses have rejected the “enhanced Commonwealth” proposal as completely unconstitutional due to its hybrid nature. The only good solution to the island’s status is statehood. Statehood would, in fact, perfect our country. Statehood would grant residents of Puerto Rico full rights to vote for their national leaders (president, vice president, 2 senators and a proportionate number of representatives). In addition, statehood would provide residents of Puerto Rico equal treatment under all federal laws and the Constitution. Statehood would also improve the island’s economy. Statehood would also benefit the United States as a whole. The U.S. succeeds when Puerto Rico succeeds. From the federal perspective, a strong and robust state of Puerto Rico would also benefit the national economy as a whole. Furthermore, statehood for Puerto Rico would also deny our Communist enemies any opportunity to turn the island into a Communist client state. That’s the reality.

    • Infidel4Ever

      Spot on. As someone who grew up on the island and still travels there regularly, I agree statehood is the best solution. Under it’s Commonwealth status, Puerto Rico has adopted many of the worst traits of socialist countries. Many of my Puerto Rican friends have left the island, and those still there are seriously looking into leaving.

      • Seek

        Statehood would mean a perpetual mainland bailout. Even some of its leaders admit as much. Please, Lord — no statehood for Puerto Rico! I would much prefer independent republic status.

        • Omar

          Oh, please. Do you even know what independence means? Independence would mean no American citizenship for the people of Puerto Rico (residents of Puerto Rico would be subjected to US immigration law, since they would be considered foreigners to this country if the island secedes from the United States). Even worse, independence would lead Puerto Rico to a Communist totalitarian dictatorship aligned with and controlled by Communist Cuba (which is currently the only totalitarian dictatorship in the Western Hemisphere) and its far-left puppet states in Latin America. About 85-90% of the separatist movement in Puerto Rico is Communist and anti-American in nature. So, independence is definitely not the solution to Puerto Rico’s status problem (independence is much worse than the current territory status). Likewise, free association is not the solution, either. The only difference between independence and free association is that the latter provides a bilateral “pact” that can be terminated by either party (the US currently has free association “pacts” with three island countries in the Pacific. Residents of those countries are not American citizens). The only good solution to Puerto Rico’s current territory status is statehood. Regarding federal funding, yes, there would be federal funding. But most of it would be provides during a transition period until Puerto Rico is on equal footing with the 50 states. Then, when it finally becomes the 51st state, Puerto Rico would receive the same equal treatment as the states. While independence would give Puerto Rico away to the far-left in Latin America, statehood would make both Puerto Rico and the United States as a whole better. Not only would residents of Puerto Rico benefit from electing our national leaders, but they would also see an improvement in the island’s economy. Likewise, the US succeeds when Puerto Rico succeeds. From the federal perspective, a strong and robust state of Puerto Rico would also benefit the US economy as well. That is undeniable.

        • Omar

          By the way, independence never gets more than around 5% of the island vote in status plebiscites. In elections, the Puerto Rico Independence Party (PIP) barely gets more than 5%of the vote, while the pro-statehood New Progressive Party (NPP) and the pro-current territory status Popular Democratic Party (PDP) get the majority of votes in every election. Based on these facts, you would be supporting a small minority trying to harm the interests of the majority.

  • PouponMarks

    The island votes like good Hispanderics in America. They were improving under the first Republican governor, who as an international banker started this place under sustainable finances. The stupid population voted him out in favor of the fantasy program put forth by the present Leftist clown.

    Let ‘em eat fish head soup.

    • Omar

      Actually, Luis Fortuno was the second Republican governor elected in Puerto Rico since 1949. Luis Ferre was the first elected Republican governor in the island territory. Ferre served as governor from 1969 to 1973. He was the founder of the pro-statehood New Progressive Party (NPP), which was established in 1967. Despite its name (the NPP was named after Theodore Roosevelt’s 1912 “Bull Moose” Party), the NPP is predominantly conservative in politics. While there are some Democratic politicians in the party (the NPP was created to broaden the statehood movement in Puerto Rico), the NPP is a majority Republican party. Virtually all Republicans in Puerto Rico are members of the NPP. This is because it was the Republican Party in Puerto Rico that historically supports statehood for the island territory. The Popular Democratic Party (PDP), which consists mainly of Democrats (the PDP has no Republicans in its membership), knows this, so in order to divide the conservative movement and undermine support for Puerto Rico becoming a state, the PDP (which supports Puerto Rico’s current territory status, as well as an impossible and unconstitutional “enhanced Commonwealth” status proposal-see my comment posted below for why “enhanced Commonwealth” is unrealistic) lobbies Republican politicians in Congress and conservative pundits to oppose any effort to make Puerto Rico a state. The PDP does this by making false claims that statehood for Puerto Rico would be “bad” for the GOP because a state of Puerto Rico would supposedly elect two Democrat senators and a proportionate number of Democrat representatives to the House of Representatives. This argument often succeeds despite the fact that it is completely erroneous and that the lies are being fabricated by Political Party which is all-Democrats, has no Republicans and which favors big government and flip-flops consistently. In Puerto Rico, the PDP also uses scare tactics on island residents in order to undermine support for statehood for Puerto Rico. The scare tactics comonly used by the PDP include: stating that residents of Puerto Rico would be required to pay higher taxes if the island territory becomes a state; stating that Puerto Rico would lose its unique and vibrant culture, including the use of the Spanish languavge (virtually all statehood opponents use this argument to try and undermine support for Puerto Rico becoming a state); and that Puerto Rico would lose representation in international competitions. All of these scare tactics are stupid, baseless and plain wrong. Regarding the tax argument, the only taxes residents of Puerto Rico do not pay are from local income (that is income earned in the island). Island residents pay all other taxes. It is also interesting that the local political party [the PDP] that tries to scare people to oppose statehood because of taxes is the same party that imposes many taxes and tax hikes on the people (those tax hikes, by the way, are what is causing the economy to get worse, as the government is trying to spend more cash on obsolete things, which is causing the government to go deeper in debt). That is such hypocrisy. Regarding the culture argument, statehood is a political change, not a cultural one. Puerto Rico’s culture has not gone away and it will not go away just because the island would become a state of the American Union. The United States is a diverse country with many cultures. Furthermore, Puerto Rico is officially bilingual (both Spanish and English are official languages). American culture co-exists in the island alongside Hispanic culture.If there is anyone who is trying to undermine culture, it is statehood opponents who

      • PouponMarks

        I don’t buy it. Your article rambles, with no paragraphs, synaptic logic connected to any examples or data, and virtually a lack of syllogistic logic. Puerto Rico has been a net drag on the Continental US since its adoption. I spent 3 years of my boyhood there, my father being in the Army. I have visited there several times on both sides of the island. PR has received subsidies going back at least 50 years in refining, pharmaceuticals, manufacturing, etc., etc. in the form of zero Feral Gummint taxes. Once the taxes run out, the industries book out, as PR labor and culture extant are not conducive to serious business enterprise. PR resembles Guatemala or Honduras stuck in a time warp. Many, many times corruption in PR has been predictably so bad, that Federal proseutors have to regularly come in, break up the crime glob and jail a bunch of people.

        PR is like a perpetual 16 year old living in Mom’s basement. Can’t get a job, can’t do a decent job, and really doesn’t care enough or have enough self respect to wipe his own arsche.

        • Omar

          I understand that politics in Puerto Rico are complex and confusing, but the fact remains that the island’s economic problems are largely a consequence of its political status as a territory of the United States. I am part Puerto Rican and I know a lot about status politics. Because of Puerto Rico’s current territory status, the island territory received less federal funding than the 50 states. The average unemployment rate in Puerto Rico is much higher than the states. The island’s unemployment rate is around 15% while the national unemployment rate is 6.5%. Because Puerto Rico is a territory and not a state, its residents cannot vote for president and vice president of the United States, nor can residents vote for US Senators nor voting representatives in the House of Representatives. Instead, island residents vote for a Resident Commissioner, who represents Puerto Rico in the House of Representatives. The Resident Commissioner can introduce bills, vote on House Committees and most other things that Representatives do in Congress. But the Resident Commissioner cannot vote on the House Floor. Because of lack of political power in the federal government, Puerto Rico is often excluded from key legislation and federal programs that benefit the states. It is because of the lack of political power and the bad economy in Puerto Rico that island residents are moving to the mainland states in large numbers. Between 2004 and now, the Puerto Rico’s population has decreased by over 4%. This drop is mainly due to the migration to the states. Every day, residents of Puerto Rico cast a vote against the current territory status and in favor of statehood by boarding a plane and flying from the island territory to the mainland states. The only way for Puerto Rico to improve its economy and for its residents to have a better quality of life is for the island to become a state of the Union. It is that simple. The problem is that there are politicians in the island continue to obstruct the people’s demand for statehood, even after the current territory status has lost its legitimacy and most people want statehood for Puerto Rico. (In a two-question status plebiscite held in Puerto Rico in November of 2012, 54% of voters said no to continuing the current territory status on the first question and 61% of voters chose statehood on the second question. Furthermore, more voters picked statehood on the second question than those who picked the current territory status on the first question). In order for Puerto Rico to improve its political, economic and social standing, it must become a state. That is undeniable.

          • Euro American

            Why should we allow a Third World people on an island where the median IQ is 89 and the majority of the population is dependent on Uncle Sugar to buy their groceries join what was until recently a civilized, western nation? It is bad enough that we still receive Third World trash from PR, DR, and Mexico infesting our nation, even when the third generation descendants of PR immigrants continue to underperform white and Asian Americans in income, education, while outperforming in welfare dependency. IMPORT THE THIRD WORLD, BECOME THE THIRD WORLD. Time to cut the brown turd that is PR loose.

          • Omar

            First of all, Puerto Ricans are NOT immigrants to the United States. They are American citizens, which residents of Puerto Rico have been since the Jones-Shafroth Act was passed by Congress and signed by then-President Woodrow Wilson in 1917 (in addition, all people who were born in Puerto Rico on or after January 13, 1941 are natural-born American citizens). Second, Puerto Rico is not the Third World. It is part of a first world country, the United States. Yes, Puerto Rico’s economy isn’t as good as the states, but that is because of its territory status. Puerto Rico has the most developed economy in all of the Caribbean region. The only way for Puerto Rico to fully advance in the 21st century is to become a state of the American Union. Having Puerto Rico secede would turn it into a Third World country with a Communist totalitarian dictatorship. But admitting the island as a state would benefit all Americans, both in the island and the 50 states. You and your white nationalist cult are no better than the separatists and other statehood opponents. Puerto Rico will become the next state of the United States.

          • Dallas25305

            Sorry Mohammad but he is right. How would your former home in the middle east welcome any foreign group immigrating??

          • Omar

            Shut up, you f**k**g racist. I am not Muslim. I have never even been to the Middle East. How would you feel like if someone called you a card-carrying member of the KKK? Stop smearing.

          • hiernonymous

            “I have never even been to the Middle East.”

            Pity. A little time over there would probably do you some good.

        • A Z

          Granted paragraphs 2 & 4 are very long, but there are 5 paragraphs.

          I also like Omars’ rundown on the NPP, the PDP and the PDP’s mendacious scare tactics.

        • PhillipGaley

          Please rest assured, your opinion will receive the full measure of consideration and esteem which your effort appears to merit, . . .

  • quasimoto63

    I think Obama should visit the island soon and lecture the Puerto Ricans about gay marriage, global warming, and the joys of collectivization and central planning like he does everywhere else in the world.

  • blert

    For Americans not aware:

    Puerto Rico has a virtually unique tax status for the issuance of ‘municipal bonds.’

    It’s bonds pay out interest that is NOT taxed at EITHER the Federal OR State level — regardless of the state you live in!

    US Treasuries are income tax free upon all state income tax returns.

    Most all other municipals are double tax free SOLELY to the residents of the issuing states.

    ONLY those in states without income taxes can ignore the PR advantage.


    What this has meant over the years: Wall Street has hyper-promoted PR securities. In particular, they have sold out of all purportion to northeastern residents of the US.

    A shocking fraction of PR linked debt is actually backed up by Big Pharma.

    News flash to Omar: the real reason that smart Puerto Ricans DON’T want statehood is that this astounding gambit would die. Any voting power the PR would gain would be absolutely trite, by comparison.

    PR is already in the economic sweet spot. Her problem is that Wall Street has ‘over juiced’ the tax exemption racket.

    Restated: PR debt is grandly overstated because — more than the market comprehends — its debts are actually covered by the Fortune 500 — Big Pharma in particular — hiding from Uncle Sugar’s taxation.

    If you are attended in any ER in America — look at your IV paraphenalia. HALF is manufactured in PR! It’s just so because of the tax angles.

    Omar is out to lunch: PR is wildly subsidized under current arrangements — going back fifty-years and more.

    A shocking fraction of all American drugs are — in fact — manufactured in PR. It’s because of the tax angle.

    Why? They don’t weigh much. So flying them up and into the Mainland is no biggie.

    In contrast, PR can’t compete in any ‘heavy’ trade. Being a part of the nation, the Jones Act requires that all trans-shipments travel in outrageously expensive American crewed, American built hulls.

    I suspect that Omar is completely unaware of this status.

    PR needs to start aiming its export engine towards the rest of the planet. Then a new day would dawn. The staggering collapse in shipping rates would cause her production to be the lowest cost source for every manner of nifty American goods.

    The average American manufacturer is TOTALLY unaware of any of the above. They don’t comprehend that PR would be able to spew out bonds at rates they could NEVER attain on the Mainland — while getting the exact same local income tax breaks that have caused Big Pharma to go to PR for generations.

    If this were taken up, PR’s unemployment fiasco would evaporate. She’d have a capital raising advantage to die for. Zero expropriation risk. A talented workforce what can deal in both Spanish and English.

    PR’s problem is that most of her suitable economic partners are totally unaware that she even exists. They are utterly ignorant about PR’s awesome tax status.

    PR’s other advantage: she has to spend not one cent for national defense. No nation on Earth would touch her. She enjoys a bizarre immunity that the rest of the planet lusts for. PR is the ultimate porcupine.

    Ideally, PR ought to be the nexus for American plastic exports… particularly those plastics used in the medical field. (hyper-sterile, precission, …) The other field that’s immediately suggestive: fine chemicals. These are those Reagent Grade fine chemicals used in laboratories and pharma labs across the planet. PR is able to use Made In USA on its exports. That’s the strongest marketing label that humanity knows.

    Towards that end PR needs to attract critical (brains) talent down to PR. A few brainiacs can go a long way to building a super export industry. (Look at Silicon Valley.)

    • Omar

      Blert, it is you who has your facts wrong. First of all, residents of Puerto Rico do pay federal taxes. The only federal taxes they are exempt from are from local income, that is income earned in the island territory. Because Puerto Rico is a territory and not a state, its residents cannot vote for our national leaders. Because of lack of voting representation, Puerto Rico is often excluded from (or is treated unequally under) key federal legislation regarding federal funding that automatically includes the states. Indeed, because Puerto Rico is a territory, it gets less federal funding than the states and it participates in less federal programs than the states. This is true for all territories. Because of the current territory status, Puerto Rico’s unemployment rate is much higher than the national average. The unemployment rate in Puerto Rico is around 15%, while the national unemployment rate is 6.5%. These numbers have remained almost steady since the 1970s, when the federal government began collecting job statistics for the jurisdictions. The average annual income for residents of Puerto Rico is around $20,000, while the average annual income for residents nationwide is between $40,000 and $50,000. It is because of the poor economic conditions that residents of Puerto Rico are leaving the island for the mainland states in large numbers in recent years. Between 2004 and this year, Puerto Rico’s population has decreased by over 4%-from 3.8 million to 3.6 million, and that number is almost certainly smaller, as an average of around 4,500 people move from Puerto Rico to the states each month. Every day, residents of Puerto Rico vote against the current territory status and in favor of statehood by boarding a plane and leaving Puerto Rico for the states. If residents of Puerto Rico really support the current territory status, why are so many people leaving the island for the mainland states? Why aren’t more Americans moving to Puerto Rico? The truth is that Puerto Rico is currently experiencing an economic disaster that can only be fixed with statehood. Residents of Puerto Rico understand this, which was why in a two-question political status plebiscite held in November of 2012, 54%of island voters said no to continuing the current territory status on the first question and 61% of voters chose statehood on the second question. Furthermore, more voters picked statehood on the second question than those who voted for the current territory status on the first question. Today, more people in Puerto Rico want the island to become a state of the American Union than to remain as a territory. Don’t repeat the Popular Democratic Party’s propaganda regarding economics or anything else about status because the PDP is wromg, period. The fact remains that residents of Puerto Rico want statehood for the island and the benefits of statehood far outweight the so-called “costs”. That is undeniable.

  • v

    If Puerto Ricans in New York only use their welfare and food stamps money and give them to the government, the country’s debt would be paid in full and it would have a surplus.

  • JoseMLopezSierra

    Dear Partner,

    After the approval of the 33rd United Nations’ resolution by consensus on June 23, 2014 asking the United States (US) to immediately decolonize of Puerto Rico, we should work together to force the United States government to comply with it.

    The facts that the United States government has maintained Puerto Rico as its colony for 116 years, has had Oscar López Rivera in prison for 33 years for fighting for Puerto Rico decolonization, and has ignored 33 UN resolutions to decolonize Puerto Rico, confirm that the US government has no intentions of ever decolonizing Puerto Rico. Therefore, we need to form a tsunami of people to force the US to comply with the 33 resolutions.

    We should peacefully protest at least 3 times a year until we achieve our goal. The first one will be a march up to the US Courthouse in Puerto Rico on the Abolition of Slavery Day on March 22. The second will be another march in Puerto Rico on a day before the UN’s Puerto Rico decolonization hearing. The third one will be a protest in New York City on the same day the UN holds its Puerto Rico decolonization hearing.

    These 3 protests are indispensable, because those who have colonies don’t believe in justice for all.

    José M López Sierra
    Comité Timón del Pueblo
    United Partners for the Decolonization of Puerto Rico